Consumers hit by energy and mortgage price hikes

CONSUMERS are facing up to an autumn of painful price rises after one of the country’s biggest energy suppliers yesterday hiked its charges, just hours after Santander confirmed that it would increase the interest rate on many of its mortgages.

SSE, formerly Scottish and Southern Energy, said a nine per cent jump in tariffs from mid-October had become “unavoidable” due to rising wholesale prices, the increased cost of using the National Grid network and green measures.

Around 8m customers will be affected by the decision, which will add around £8.53 a month to the average dual energy bill and paves the way for price rises at rival providers.

“We expect other suppliers to follow suit ahead of the peak winter period,” said Tina Cook, an analyst at Charles Stanley.

Chief executive Ian Marchant said the cost of government-imposed environmental measures was largely to blame.

“Compared to last year they’ve gone up by over 30 per cent. The biggest increase has been the money we’re spending on energy efficiency measures where we subsidise loft insulation and cavity wall insulation. It’s great for people to do that but the cost for us has more than doubled in the last twelve months.”

SSE has promised not to increase prices again until the second half of 2013 and said that tariffs would be reduced if possible.

Meanwhile hundreds of thousands of people who have mortgages with Santander found out yesterday that their interest rate will increase by 0.5 percentage points to 4.74 per cent from October.

The bank blamed the “increased cost to Santander of raising the money which we lend to our customers”. Mortgage holders whose loans are fixed to the standard variable rate will be affected by the decision, which was made despite the Bank of England base rate remaining at 0.5 per cent.

“This latest increase in mortgage interest rates is another blow to struggling households, many of whom are trapped on standard variable rates,” said Which? chief executive Peter Vicary-Smith. “The banks are profiting from these mortgage prisoners while giving better deals to new customers with low loan to value ratios.”